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MN resorts seek property tax relief

Tom Ossell says a little tax break would make a big difference for his 10-cabin resort.

The owner of Northern Lights Resort and Outfitting at Kabetogama, near International Falls, said a 2005 resort tax relief measure spurred resort owners to improve their facilities. That, in turn, allowed them to raise rates, which provided more sales tax to the state.

Northern Lights paid $4,200 in sales taxes in 2002, but after he made improvements he could afford due to the 2005 legislation, Ossell paid $13,500 last year.

"Any little help to get new building is a pretty big deal," Ossell said Monday after trying to convince a Senate committee to back a tax break.

The bill Ossell supported would reduce property taxes on the first $1 million of a small resort's value. It is the main resort-related bill in the 2007 Legislature.

While the bill's concept of keeping resort property taxes low gained widespread support from senators of both parties, Senate Property Tax Chairman Rod Skoe, DFL-Clearbrook, said the proposal could change as he tries to wrap up his overall property tax bill in the next few days.

Lakes-area legislators in 2005 managed to pass a resort property tax relief bill lowering property taxes on the first $500,000 value of a ma-and-paw resort. That helped, resort owners say, but this year they want to double the level taxed at the lower rate.

Bill sponsor Sen. Bill Ingebrigtsen, R-Alexandria, said the numbers show small Minnesota resorts are endangered: 36,000 resorts served Minnesotans in the early 1970s, but just 900 survive.

Many senators on Skoe's committee said resorts should receive help.

"These things are important," Senate Minority leader Dave Senjem, R-Rochester, said. "I would like to see them helped."

Skoe said spending a vacation at a small resort is an important tradition for Minnesotans. But it also is good for the economy.

A Park Rapids study showed that every dollar spend on a resort circulates in a community 15 times, much more than in other businesses, Skoe said.

Skoe was not happy that Ingebrigtsen, a freshman senator, had not talked to him about the bill in advance. With little time left before he must finish his property tax proposals, Skoe said he still hopes to help resorts, but on Monday could not say how close Ingebrigtsen's bill will be to the final product.

Rep. Dean Simpson, R-Perham, is working on a similar bill in the House. He said he hopes the $1 million figure is approved, "but I don't know if we can get there all the way."

Simpson said he holds out little hope for another resort bill - to exempt small resorts from paying sales taxes on materials used to expand facilities. Ossell said that bill also is important because it would influence resort owners to repair and expand facilities, which then would pay more taxes.

House Property Tax Chairman Paul Marquart, DFL-Dilworth, said he doesn't expect the sales tax exemption to pass, but he does think something like the Simpson-Ingebrigtsen measure will.

"Finding solutions for resort problems is a priority," Marquart said.

Resort owners say they need another legal fix: Under existing law, they sometimes face instances when just repairing or rebuilding existing facilities puts them in violation of a zoning ordinance.

Ossell said an example of the problem is when a resort is slightly expanding a cabin to meet a local, state or federal rule requiring a larger room. That improvement to meet a government code could put the resort in violation of other rules that do not allow expansion within so many feet of a lake.

When many resort cabins were build decades ago, today's rules about constructing facilities away from the water did not exist.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.